Adam Friedman

In Wilmington Savings Fund Socy., FSB v. McLaughlin, Slip Opinion 04576 (Appellate Division 2^nd Dept 2021), the  judgment of foreclosure and sale was reversed, branches of the plaintiff’s motion which were for summary judgment on the complaint as asserted against the defendants Michael McLaughlin and Rosemarie McLaughlin, to strike those defendants’ answer, and for an order of reference was denied, the plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale denied, and the order entered June 8, 2018, were modified.  

On August 5, 2008, the defendant Michael McLaughlin executed a promissory note in the sum of $417,000 in favor of Bank of America, N.A.. The note was secured by a mortgage executed by Michael McLaughlin and the defendant Rosemarie McLaughlin. The plaintiff commenced an action to foreclose the mortgage alleging that the mortgage was assigned to it and that it was the holder of the note and mortgage.

The plaintiff moved for summary judgment, to strike their answer, and for an order of reference. The defendants opposed the motion, asserting, that they did not default in making payment, and that Bank of America erroneously deemed the account in default. In an order entered June 8, 2018, the Supreme Court, granted those branches of the plaintiff’s motion and referred the matter to a referee to ascertain and compute the amount due to the plaintiff. The plaintiff then moved to confirm the referee’s report and for a judgment of foreclosure and sale. The court granted the plaintiff’s motion for Judgment of foreclosure and sale. The defendants appealed.

“In order to establish prima facie entitlement to judgment as a matter of law in a foreclosure action, a plaintiff must submit the mortgage and unpaid note, along with evidence of the default” (Zarabi v Movahedian, 136 A.D.3d 895, 895). A plaintiff may establish a default in payment by, inter alia, submitting an affidavit from “a person having [personal] knowledge of the facts” (CPLR 3212[b]) or by submitting other evidence “in admissible form” (Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 N.Y.3d 498, 507; see Bank of N.Y. Mellon v Gordon, 171 A.D.3d 197, 208). “Conclusory affidavits lacking a factual basis are without evidentiary value” (U.S. Bank Trust. N.A. v Vanterpool, 189 A.D.3d 1516, 1518).

The Appellate Court found that contrary to the Supreme Court’s determination, the plaintiff failed to establish, prima facie, the defendants’ default in payment by submitting the affidavit of Haley Pope, the Foreclosure Manager for its loan servicer. Pope did not specifically state that she had personal knowledge of the defendants’ default in payment. To the extent Pope relied on her review of business records, she did not identify which records she relied on to assert a default in payment, or attach any business records to her affidavit to substantiate the alleged default in payment. Thus, the plaintiff failed to meet its prima facie burden by relying on Pope’s conclusory assertion that the defendants defaulted in payment, which was not supported by a factual basis (see id. at 1518; Deutsche Bank Natl. Trust Co. v McGann, 183 A.D.3d 700, 702). Further, the affidavit of Ilda Huzejrovic, another employee of the loan servicer, was not submitted on the plaintiff’s motion, for summary judgment.

Accordingly, since the plaintiff failed to meet its prima facie burden, the Supreme Court should have denied those branches of its motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer, and for an order of reference. 

Appellate Court in this matter outlined the standard as needing the records relied upon within the affidavit and/or attached to the affidavit to substantiate the default.  If you have any questions regarding this case, please contact Deborah Gallo, Esq. at dgallo@friedmanvartolo.com. 

In recent decision, Emigrant Bank v. McDonald, Supreme Court, Appellate Division, Second Department, New York, August 4, 2021,  –NYS3d–, 2021 WL3378788, the Appellate Court affirmed the judgment of foreclosure and sale where the subordinate note holder attempted to utilize the statute of limitations defense. 

The defendant Da’Tekena Barango–Tariah appealed from a judgment of foreclosure and sale of the Supreme Court, Kings County, dated November 1, 2017. The order and judgment of foreclosure and sale, an order of the same court dated August 12, 2016, granted those parts of plaintiff’s motion which were for summary judgment as asserted against the defendant Da’Tekena Barango–Tariah, to strike that defendant’s answer, and for an order of reference, and denying that branch of that defendant’s cross motion which was,  for summary judgment dismissing the complaint, appointing a referee to compute the amount due to the plaintiff,  and confirmed the referee’s report and directed the sale of the subject property.  The Appellate Court ordered that the order and judgment of foreclosure and sale is affirmed, with costs.

The plaintiff commenced the action to foreclose a mortgage in May 2014. The plaintiff alleged that the defendants Dawna McDonald and Neisha Lynch (borrowers) executed a note that was secured by a mortgage on property located in Brooklyn, and that the borrowers had defaulted under the terms of the subject note and mortgage.  McDonald interposed an answer to the complaint and Lynch failed to appear in the action. The defendant, Da’Tekena Barango–Tariah ,(subordinate note holder), filed an answer which included a statute of limitations defense.

The plaintiff made a motion for summary judgment on the complaint against the subordinate note holder, to strike his answer, and to appoint a referee to compute the amount due to the plaintiff. The subordinate note holder opposed the plaintiff’s motion and cross-moved, for summary judgment dismissing the complaint insofar as asserted against him. By order dated August 12, 2016, the Supreme Court, granted the plaintiff’s motion and denied the subordinate note holder’s cross motion. In a second order dated August 12, 2016, the court appointed a referee to compute the amount due to the plaintiff. An order and judgment of foreclosure and sale dated November 1, 2017, confirmed the referee’s report, and directed the sale of the subject property. The subordinate note holder appealed from the order and judgment of foreclosure and sale.

The Appellate Court found that, “[T]he Statute of Limitations is generally viewed as a personal defense” (John J. Kassner & Co. v. City of New York, 46 N.Y.2d 544, 550, 415 N.Y.S.2d 785, 389 N.E.2d 99), which is waived if it is not affirmatively pled (see CPLR 3018[b]; see also John J. Kassner & Co. v. City of New York, 46 N.Y.2d at 552, 415 N.Y.S.2d 785, 389 N.E.2d 99; see also 1 Weinstein–Korn–Miller, N.Y. Civ Prac: CPLR ¶ 201.11 [2021]; cf. CPLR 3211[a][5]).

 When properly invoked, an action to foreclose a mortgage is subject to a six-year statute of limitations (see CPLR 213[4]). However, an “understanding of the parties’ respective rights and obligations under … the note and the mortgage” is required in order to determine when an action to foreclose a mortgage accrued and whether it is timely (Freedom Mtge. Corp. v. Engel, 37 N.Y.3d 1, 20, 146 N.Y.S.3d 542, 169 N.E.3d 912).

In general, with respect to a mortgage payable in installments, separate causes of action accrue for each installment that is not paid, and the statute of limitations begins to run on the date each installment becomes due.  (U.S. Bank Trust, N.A. v. Aorta, 167 A.D.3d 807, 808, 89 N.Y.S.3d 717). However, “residential mortgage contracts … typically provide[ ] noteholders the right to accelerate the maturity date of the loan upon the borrower’s default, thereby demanding immediate repayment of the entire outstanding debt” (Freedom Mtge. Corp. v. Engel, 37 N.Y.3d at 21, 146 N.Y.S.3d 542, 169 N.E.3d 912). When the holder of such a note elects to exercise that remedy, “a cause of action to recover the entire balance of the debt accrues at the time the loan is accelerated, triggering the six-year statute of limitations to commence a foreclosure action” (id.; see CPLR 203[a]; 213[4]).

In this case, the subordinate note holder contended that the plaintiff commenced a prior foreclosure action to enforce the subject note and mortgage in March 2007. Therefore, the note holder alleged that the plaintiff elected to accelerate the mortgage debt when it commenced the 2007 action, and that more than six years had elapsed since that debt had been accelerated.  So, the question became whether they elected to revoke the acceleration.  The revocation of an election to accelerate a mortgage debt may be accomplished by an “unequivocal overt act” (Albertina Realty Co. v. Rosbro Realty Corp., 258 N.Y. 472, 476, 180 N.E. 176), taken by the holder of the note which “destroy[s] the effect” of the holder’s prior election to accelerate the mortgage debt (id. at 476, 180 N.E. 176; see Freedom Mtge. Corp. v. Engel, 37 N.Y.3d 1, 146 N.Y.S.3d 542, 169 N.E.3d 912).

Here, the subordinate note holder conceded that the 2007 action was discontinued less than six years after it was commenced (see Freedom Mtge. Corp. v. Engel, 37 N.Y.3d 1, 146 N.Y.S.3d 542, 169 N.E.3d 912). The plaintiff’s submissions, which included a loan modification agreement entered into between the plaintiff and the borrowers, demonstrated that the plaintiff revoked its prior election to accelerate the mortgage debt less than six years after the commencement of the 2007 action.  The Supreme Court properly granted that branch of the plaintiff’s motion which was for summary judgment striking the subordinate note holder’s statute of limitations defense, and properly denied that branch of the subordinate note holder’s cross motion which was, in effect, for summary judgment dismissing the complaint insofar as asserted against him as time-barred.

For more information regarding this case, please contact Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.

Governor Phil Murphy today signed legislation that will provide comprehensive housing eviction prevention and utility assistance for renters who have been financially impacted by the COVID-19 pandemic. The legislation (S3691) appropriates an additional $500 million for the COVID-19 Emergency Rental Assistance Program (CVERAP) and $250 million for utility assistance, both programs administered by the New Jersey Department of Community Affairs. The bill also mandates new eviction and foreclosure moratorium deadlines and special eviction protections for tenants who were directly impacted by the pandemic. New Jersey’s eviction moratorium continues through August for all state residents with household incomes below 120% Area Medium Income and through the end of the year for certain households with incomes below 80% AMI. The announcement from the CDC extending the nationwide moratorium on evictions for 60 days may provide additional protections for certain residents.

     The Governor also signed legislation (A4463) providing additional protections for individuals who were unable to pay rent during the public health emergency by mandating that court records pertaining to their non-payment during this period be kept confidential.

     The eviction prevention bill will gradually phase out the State’s eviction moratorium based on individual renters’ situations while mandating special protections for those who were unable to pay their rent during the period of March 1, 2020 through August 31, 2021, or, for certain tenants, through December 31, 2021. Additionally, the CVERAP program, which was previously aimed at those who were making less than 80 percent of AMI, will expand its scope of eligible applicants by August 31, 2021, to include those making less than 120 percent of AMI.

     * Ensures that eviction protection is available for tenants with household incomes below 120 percent AMI who were unable to pay their rent between the covered period of March 1, 2020 and August 31, 2021, and who provide a self-certification form to their landlords and, when applicable, to the court. Tenants meeting these requirements cannot ever be evicted for any outstanding rent during the covered period. While tenants who are covered by this special protection may not be evicted, this rent is still due to landlords and landlords may pursue this rent through a money judgment.

     * Provides additional eviction preventions for tenants with household incomes below 80 percent AMI, who have applied for state or local rental assistance, and who have experienced an economic impact due to the COVID-19 pandemic. Tenants meeting these requirements who provide a self-certification for to their landlords and, when applicable, to the courts, are protected from eviction prior to December 31, 2021, for unpaid rent accrued from September 1, 2021 through December 31, 2021. This is in addition to protection from eviction for rent accrued during the covered period as described above.

     * For the special eviction protections to take effect, the tenant MUST provide the required self-certification form to their landlord and, when applicable, to the courts.

     * All New Jersey households with income less than 120 percent AMI may apply for the COVID-19 Emergency Rental Assistance Program.

     * Landlords who are receiving rental assistance must waive any late fees accrued by tenants during the special protections period.

     * Landlords may not report delayed rent to crediting agencies and they cannot sell the debt.

     * Landlords may not disclose non-payment of rent to others and prospective landlords may not deny renting to a person who wasn’t able to pay rent during the covered period of March 1, 2020 and August 31, 2021.

     * The moratorium on home foreclosures ends on November 15, 2021, for all income levels. This includes landlords facing foreclosure who currently have tenants.

For questions regarding the legislative changes, please contact Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.

On June 29, 2021 the Supreme Court issued its decision in Alabama Association of Realtors, et al. v. United States Department Of Health And Human Services, et al., 594 U.S. ___ (2021). The Court denied the D.C. District Court’s stay of the Centers for Disease Control and Prevention’s (CDC) nationwide moratorium on evictions during the COVID-19 pandemic. Justices Thomas, Alito, Gorsuch, and Barrett would have granted the application. Justice Kavanaugh concurred in the judgment. He agreed with the District Court, which held that the CDC exceeded its existing statutory authority by issuing a nationwide eviction moratorium. But since the CDC plans to end the moratorium on July 31, 2021, he voted to deny the application. Kavanaugh wrote individually to clarify that new legislation would be required to extend the moratorium beyond July 31. Kavanaugh agreed with the district court that the eviction moratorium is unlawful but refused to disturb the district court’s stay of its own order. Ultimately, we now know that there would be five votes to undo a future, similar regulation without Congressional action.

Previously, the district court concluded the Public Health Service Act, 42 U.S.C. §§ 201 – 300mm-61, did not grant the CDC the legal power to impose a nationwide eviction moratorium. The Court explained that the first clause of section 264(a) grants the CDC, with approval of the Secretary of the Department of Health and Human Services, authority to make and enforce regulations to prevent the interstate or international spread of disease. But the Court interpreted this authority as being tied to, and narrowed by, the second clause empowering the CDC to regulate “sources of dangerous infection to human beings.”

The CDC moratorium went into effect on September 4, 2020 and was extended to July 31, 2021. The CDC moratorium applied to all residential properties nationwide. Violators of the moratorium faced potential criminal penalties, including a fine of up to $250,000, one year in jail, or both, and a maximum fine of $500,000 for organizations.  As this article is written, and the Delta Variant continues to spread, the White House is imploring that Congress act and pass legislation.   For any questions, please contact Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.  

Massachusetts’s pause on evictions expired on October 17, 2020. When the state moratorium expired, a federal moratorium established by the Centers for Disease Prevention and Control (CDC) became effective in Massachusetts. Through July 31, 2021, the CDC moratorium prevents residential evictions for non-payment for qualified tenants who submit a written declaration to their landlord. Courts will accept filings and process cases and may enter judgments but will not issue an order of execution (the court order that allows a landlord to evict a tenant) until after the expiration of the CDC order. Protection is limited to households who meet certain income and vulnerability criteria.

In addition, the Trial Court has changed its procedures to provide for a two-tier process that will enable tenants and landlords to access resources and mediate their disputes in order to preserve tenancies.

A state law enacted in December of 2020 added new requirements for notices to quit issued by landlords and made additional changes to court processes. Chapter 257 of the Acts of 2020, An Act providing for eviction protections during the COVID-19 pandemic emergency, as amended by sections 12 to 17 of chapter 20 of the Acts of 2021 requires landlords to provide a form containing certain information related to residential tenant’s rights and available resources when giving a written notice to quit to a residential tenant for nonpayment of rent. The Act also requires EOHED (mass.gov/noticetoquit) to (1) develop the accompanying form that a landlord will provide when given a residential tenant a written notice to quit for nonpayment of rent; and (2) receive from landlords electronic copies of any such notices to quit. This change remains in effect until January 1, 2023.

The Chief Justices of the Housing Court, District Court, and Boston Municipal Court departments each issued a standing order outlining procedures applicable in their respective court departments for summary process (eviction) cases following the expiration of the Massachusetts eviction moratorium.

To wit: “Accordingly, it is hereby ORDERED, pursuant to my authority as set forth in G.L. c. 211B, § 9, that to the extent any provisions of Trial Court Rule I: Uniform Summary Process Rules are inconsistent with the individual standing orders issued by the Chief Justices of the Housing Court, District Court, and Boston Municipal Court departments, those provisions of Trial Court Rule I: Uniform Summary process Rules are suspended until further order.

This Administrative Order is effective as of June 15, 2021 and will remain in effect until further order. This Administrative Order is temporary and may be modified or rescinded at any time, as necessary.”

We continue to monitor change and will update according.  For any questions, please contact Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.